One-Way Traffic

Friday’s weakness in U.S. Tsys seeped through into JGBs, with JGB futures opening lower and moving in a downward direction for the bulk of the Tokyo session. The contract sits 35 ticks below Thursday’s settlement levels at typing, after Japanese participants returned from their elongated weekend.

• Meanwhile, cash JGBs sit little changed to ~3bp cheaper across the curve. 10s provide the firmest point on the JGB curve (aided by the presence of the BoJ’s fixed rate operations), while 7s and 30+-Year paper provide the weakest points, the former on the weakness in futures and the latter on the relative lack of BoJ control in that area of the curve.
• Domestic headline flow has been light, with wider affairs driving price action.
• This has left little to counter the offshore-driven weakness, as Tokyo participants prepare for a three-day break, which will be observed from Tuesday through Thursday.